Lawmaker targets insurance company’s ‘unfair’ rising rates

BATON ROUGE — A St. Mary Parish lawmaker is considering legislation that would create an additional layer of approval for Louisiana Citizens Property Insurance to increase wind and hail premiums.

Jeremy AlfordCapitol Correspondent

BATON ROUGE — A St. Mary Parish lawmaker is considering legislation that would create an additional layer of approval for Louisiana Citizens Property Insurance to increase wind and hail premiums.Citizens, the state’s insurer of last resort, was the source of criticism for coastal lawmakers last year when it hiked premiums in south Louisiana parishes by double and triple digits. Sen. Bret Allain, R-Franklin, who represents portions of Terrebonne and Lafourche parishes, said Gulf Coast residents realize their homes come with the added risks of natural disasters, but “they already pay their fair share of that risk” without the increases.Residents in Allain’s native St. Mary Parish saw an increase of 170 percent on wind-only policies last year.In Terrebonne Parish, a 52 percent increase was implemented. In Lafourche Parish, it was 47 percent.When applied to the average cost of a policy in each parish, the median increase means $900 more to policyholders in Terrebonne, $800 more in Lafourche and an additional $2,000 in St. Mary. Franklin said his legislation, depending on the final draft, could force Citizens to seek approval of the House and Senate insurance committees for any increase exceeding 25 percent in any parish.“Last year we tried to plead a case before a stacked Citizens (board of directors),” he said. “That was unfair, and this could be a better way.” Allain said the methodology for his legislation is still being worked out with participation from Senate Insurance Chairman Blade Morrish, R-Jennings, and others.While the new rates may provoke sticker shock among coastal residents, Morrish passed legislation that was endorsed by Gov. Bobby Jindal last year that grants property insurance holders a two-year, temporary 10 percent break on their coverage, including the recent increases. A similar break for coastal parishes was on the books for the five years following hurricanes Katrina and Rita in 2005. Moorish’s waiver will expire in 2015 and applies to Calcasieu, Cameron, Iberia, Jefferson, Lafourche, Orleans, Plaquemines, St. Bernard, St. Mary, St. Tammany, Terrebonne and Vermilion parishes.Citizens is state-mandated to be more costly than private property insurance companies in that it must charge 10 percent more than the actuarial rate, or whatever private companies are writing. Treasurer John Kennedy called the increases “illegal” because private companies are not writing wind and hail coverage in coastal parishes, but Attorney General Buddy Caldwell issued an opinion clearing the increase last year. In response, Insurance Commissioner Jim Donelon said his department has a responsibility to make sure Citizens does not become an attractive product for property owners, while officials with Citizens argued their wind policies have long been underpriced.Citizens, according to its mission, is supposed to provide insurance to Louisiana residents who are “in good faith entitled, but unable, to procure insurance through the voluntary insurance marketplace.”The regular session convenes April 8.